David DiSalvo is the author of "Brain Changer: How Harnessing Your Brain’s Power to Adapt Can Change Your Life" and the best-selling "What Makes Your Brain Happy and Why You Should Do the Opposite", which has been published in 10 languages. His work has appeared in Scientific American Mind, Forbes, Time, Psychology Today, The Wall Street Journal, Slate, Salon, Esquire, Mental Floss and other publications, and he’s the writer behind the widely read science and technology blogs “Neuropsyched” at Forbes and “Neuronarrative” at Psychology Today. He can be found on Twitter @neuronarrative and at his website, daviddisalvo.org. Contact him at: disalvowrites [at] gmail.com.

Netflix, Your Brain, and Why the DVD Price Hike is a Good Thing

The Netflix price hike has customers sharpening their pitchforks, but the uproar will not last long. Instead of yelling foul, we ought to be thanking Netflix for finally crystallizing a truth that was really there all along–and in short order we’ll be doing just that.

Since its launch, Netflix has been banking on a frustrating but persistent characteristic of the human mind: we are really bad forecasters. The inestimable Dan Ariely pointed this out in his June Wired piece on how online companies get you to spend more money. The basic problem is that the human brain struggles to envision anything close to an unbiased view of our place in the future. When we try to think of the sorts of movies we’ll want to watch (those we log in our queue), we often choose movies we think we should watch. That’s how the future-self bias works: we make decisions blinded by the iridescent glow of how we think we should act in the future.

But want and should are leagues apart, and the should movies sit dormant in the queue. What’s been happening for years is that people have been requesting fewer DVDs from Netflix while spending the same amount of money–which, ironically, is more money than they’d spend if they had just rented the want movies from a rental store.

The issue is that rental stores, as we know, charge late fees, and late fees are the reason why Netflix was so successful to begin with. So on one side we have the rental store dinosaurs and their insidious late fees, and on the other we have Netflix charging more money to rent DVDs by mail. This would seem like a problem, except the market has already solved it. Redbox is the solution, and it’s booming. With Redbox, you get what you want, you get it now, and you get it cheap even if you keep it an extra day or two. No forecasting, queue building, or anguish about spending more than we should is required.

The reason we should thank Netflix is that by charging more to rent DVDs, they’ve given us the perfect pause to ask ourselves why we’re renting DVDs by mail. In the process, many of us will realize that what we really want from Netflix is to stream content that we want now. That’s worth paying $10 a month for, as a retainer to get immediate access to movies and TV series we want to watch.

For immediate access to DVDs we want, Redbox has filled the niche’, followed by competitors like Blockbuster that have bought into the gospel of buck-a-night movies, minus rude clerks demanding ridiculous late fees. The boxes, red or blue or otherwise, are rapidly taking over the DVD business.

In closing, I urge calm. Netflix has done nothing but cast a clarifying spotlight on the bias that has been leading us astray for years.

To Netflix I say, get going on making the good stuff available via streaming, because by showing us where we’ve long gone wrong, your place in the market is about to change.

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